A string of new pipeline applications have been submitted to the Federal Energy Regulatory Commission (FERC) over the last few years in an attempt to meet the growing demand for natural gas in New York and New York City. It’s no secret the Big Apple needs the added infrastructure, but how does that work in a state that has recently banned fracking and regularly has activists, mostly from the city, protesting the very pipelines that could cut heating costs for consumers?
New York—And New York City’s—Growing Natural Gas Needs
Earlier this month, New York released its most recent energy plan. While such a document would not normally be deemed controversial, calling for a 32 percent increase in natural gas usage in the same week the state banned fracking within its borders, shows just how much of a disconnect there is in the state.
New York already consumes more natural gas yearly than the United States average, as the following chart from the Energy Information Administration (EIA) shows:
In fact, New York ranked fourth on the 2013 EIA list of states with the largest natural gas consumption, and according to the energy plan,
“Approximately 97 percent of the natural gas supply required to meet the demands of New York natural gas customers is from natural gas supply production regions in other states.” (emphasis added , Pg. 83)
And while that’s great news for neighboring states like Pennsylvania that have plenty of gas to export, it puts New Yorkers in a bit of a predicament with a growing need to import more gas. Scott Waldman discussed this in a recent Capital New York article,
“The future of energy in New York involves miles and miles of pipelines carrying natural gas from other states, a notion that has been reinforced both by Governor Andrew Cuomo and the governors of New England states that are also pushing for more pipeline infrastructure. New York and New England are increasingly powered by natural gas, thanks to the nation’s fracking boom.” (emphasis added)
As Waldman mentions, the solution should be simple: add more pipelines. But as the past seven years of waiting on the Department of Environmental Conservation (DEC) to make a decision on fracking has shown, nothing in New York is that simple. From the Capital New York article,
“The state’s decision-making process may yet take a while—this administration in particular tends to move excruciatingly slowly in revealing its position on controversial energy projects. But in the end, the state’s decision on pipelines is less likely than the others to go the objectors’ way. One reason is simply that the legal grounds for blocking the pipelines would be shaky—the state would have to show that they have an adverse impact on bodies of water—and a decision to do so could actually get overturned in court. Perhaps more significantly, blocking the pipelines would greatly complicate the administration’s energy policy, which has, among other things, made New York much more reliant on natural gas, which in turn necessitates the construction of more pipelines.” (emphasis added)
Just how dependent is New York on natural gas, not just for heating, but also for electricity? From the Capital New York article,
“The “lights will go out” if significant resources are not invested in natural gas pipelines and transmission lines, said Stephen Whitley, president of the New York Independent System Operator, the state’s grid operator.” (emphasis added)
Zeroing in on New York City, the high demand for natural gas within the city has historically resulted in some of the highest residential gas prices in the country, as the following EIA chart demonstrates. New York is represented by the blue line, while the United States is shown in green.
Adding to that already stretched market, in April 2011 then New York City Mayor Bloomberg began the NYC Clean Heat Program that called for a 50 percent reduction in fine particulate matter emissions (PM) by transitioning to fuel sources like natural gas. Since June 2014, that’s resulted in more than 4,000 buildings switching to alternative heating sources, including natural gas. Market Watch reported on just the commercial buildings that transitioned in 2013:
“Through October, 1,249 large buildings in Con Ed’s New York City territory switched from oil to gas, a pace of 125 conversions per month. In all of 2013, Con Ed won 1,293 new big-building gas customers, or 108 per month.”
“On many days natural gas pipelines filled to capacity, leading to record-high wholesale natural gas prices at several locations. Spot natural gas prices reached $120/MMBtu in New York City (up from a 2013 high of $36/MMBtu), $78/MMBtu in Boston (up from a 2013 high of $34/MMBtu), and $34/MMBtu in Chicago (up from a 2013 high of $5/MMBtu).” (emphasis added)
Pipeline Plans in the Works
Recently added pipelines have begun to make a difference, though. From the Capital New York article,
“We certainly think that, from the economic perspective, additional pipeline capacity into the state will be useful,” NY Public Service Commission chairwoman, Audrey Zibelman, said. “Right now, the state has pipeline capacity that gives us an advantage of low-cost natural gas, and as we increase, really demand for natural gas as a resource that’s necessarily going to give us an opportunity to look at investments and there are pending investments now in front of the D.E.C..” (emphasis added)
And from EIA:
“So far in the winter of 2013-14, however, natural gas price spikes in New York City remained less frequent than in Boston, although on the coldest days the spot prices tend to be higher in New York City than in Boston. Natural gas pipeline expansion into the New York City area may be providing a buffer against the frequency of price spikes this winter. Encouraged by the proximity to Marcellus natural gas production and rising baseload consumption, pipeline capacity increased, and this likely contributed to the mitigation of price spikes in the New York City area.” (emphasis added)
The following EIA chart helps give this a little perspective. It shows the price spikes for New England, New York and the Henry Hub after Spectra’s New York-New Jersey Expansion was put in service in 2013, adding enough capacity to heat roughly two million homes.
EIA said in 2013,
“Since November, New England has had the highest average spot natural gas prices in the nation. Average prices at the Algonquin Citygate trading point, a widely used index for New England natural gas buyers, have been $3 per million British thermal units (MMBtu) higher than natural gas prices at the Henry Hub, and more than $2 per MMBtu higher than average spot price at Transco Zone 6 NY, which serves New York City and has historically traded at prices similar to those in New England.”
The difference between New York and New England in 2013? New York added additional pipeline capacity. This increase in natural gas from Spectra helped to keep prices near those of Louisiana, while New England prices still skyrocketed. And that cost reduction that directly benefits residential consumers will only get better as pipeline capacity is increased. From the Capital New York article,
“There are right now at least three major proposed pipelines that would cross New York. The Algonquin project includes 37.4 miles of pipeline in New York, Connecticut and Massachusetts, most of which would be within or adjacent to existing pipelines. The 124-mile Constitution pipeline will cross through Broome, Chenango, Delaware and Schoharie counties. It also calls for the upgrading of an existing compressor station. The Northeast Energy Direct would run Pennsylvania to New England.”
In addition to those lines, Williams announced earlier this month a new application to FERC that would deliver much needed natural gas to New York City in time for the 2017-2018 heating season. The New York Bay Expansion Project would add increased capacity to the decades old Transco line to support an additional 500,000 homes in the city. From a recent Penn Energy article,
“A reliable and resilient supply of energy is critical to the local New York and Long Island communities we serve,” said Ken Daly, President, National Grid New York. “Williams’ New York Bay Expansion project will help ensure affordable, cleaner, safe, reliable, secure and stable energy to meet our customers’ needs and support the region’s economic vitality.” (emphasis added)
And a project like this would bring that demand by adding to already existing infrastructure. Also from the Penn Energy article,
“Demand for natural gas in New York City and other major markets continues to grow as customers recognize its value as a clean, affordable and abundant energy source,” said Rory Miller, senior vice president of Williams Partners’ Atlantic-Gulf operating area. “Our extensive footprint in North America gives Williams a strategic advantage to leverage across existing infrastructure to meet emerging needs. Whether it’s incremental growth like the New York Bay Expansion or large-scale organic projects, our focus as a premier natural gas infrastructure provider is connecting the best supplies with high-value markets.”
Even Environmental Protection Agency (EPA) Administrator Gina McCarthy has stressed the importance of investing in new pipeline infrastructure to transport natural gas across the country. As she explained, doing so will be a boon for the economy and the environment:
“This is really about building a healthy industry, a healthy investment market, and lowering carbon pollution,” McCarthy said. (emphasis added)
Activists Must Have Missed the Memo
So, there’s a need for more natural gas, pipeline plans are in the works to meet this demand, and adding additional infrastructure is going to improve air quality and lower costs for consumers. The decision to approve the few state permits FERC doesn’t regulate should be a no brainer, right? Well, not quite—this is New York after all.
And it wouldn’t be New York City without lots of protesting, right? Right. Which is why even back when winter natural gas prices in the city were out of control and residents were already witnessing incredible improvements to air quality from transitioning to natural gas, activists still came out in full force to protest.
Remember the naked green people marching through New York City to protest that same Spectra expansion that added enough gas for roughly two million people? We try not to either, but hey it happened. And they really did strip down, paint themselves green, and march through the city to protest the “poisonous” gas that was actually reducing air emissions in the city.
There’s video out there if you’re brave, but here’s an image to refresh your memory.
Fortunately science won out in that case and those same residents today experience the benefits of the Spectra expansion when they go into some of their favorite buildings or perhaps even in their own homes.
Unfortunately, the protesting over this needed infrastructure hasn’t gotten any less strange in the last three years. Most recently Yoko Ono, one of Governor Cuomo’s “science advisors” behind the recent fracking ban, paid for an advertisement in the New York Times asking Cuomo to reject the Constitution Pipeline. This project will not only aid in getting much needed natural gas to New York City and beyond to New England, but it will also bring millions of dollars of revenue to each of the counties it crosses, as EID has written about before.
Yoko Ono opposes the Constitution pipeline because supposedly at one point there was talk the pipeline could run across her second home property in Delaware County. She is able to stage her protests comfortably from her home in the Dakota Building in New York City, which as EID uncovered in 2012, has central heating and air and converted to natural gas in 2012. One’s first thought is: why would someone protest the fuel source they use, especially when costs will be lowered from added capacity? Oh right, a former music legend’s widow living in a multi-million dollar apartment probably isn’t too concerned about heating costs.
Here’s the full-page ad that Yoko ran:
Take a look at this “scar that never heals” as Yoko describes it:
The pipeline runs right where those crops are growing in Lycoming County, Pa. Imagine that.
And while she asked to “not transport fracked gas across our state,” we’re willing to bet she never imagined a winter without any heat, which is essentially what she is asking for.
So the question remains, with the resignation of DEC Commissioner Joseph Martens, who is headed back to his anti-fracking roots, will the DEC finally approve the few permits they have authority over to get these pipelines moving? Or will they drag their feet for another seven years, while the lights quite literally go out across the state?
Only time will tell, but unfortunately when it comes to New York presenting all of the science in the world before them, doesn’t mean the administration will actually use any of it. In the meantime, we’ll likely get to see more attention-driven antics from the activists who like to believe energy comes from a light switch, and not the many oil and natural gas wells and pipelines bringing them clean, affordable, natural gas from other states.